Questions to Ask Yourself Before Making A Donation
From identity theft and tax fraud to criminals finding ways to hack into your company’s network, we are learning every day that it’s simply not safe to let your guard down – for anyone or anything. Unfortunately, that mindset should apply when you are considering gifting a charitable donation as well.
Some fraudsters, in an attempt to prey on the generosity of strangers, have begun to solicit funds for fake charities particularly during and immediately after tax season. But you can shut down these scams by asking yourself these critical questions.
Is this the charity I know and love or is it a spin off?
We are a sucker for the brands we know and love, and criminals will invoke similar names, attributes, branding to trip you up and get you to write that check. Even if you are 99 percent certain the check you are about to write will go to a well-respected nonprofit organization, it makes since to conduct a quick search online to remove all doubt. Two resources to consider are:
- The Exempt Organization Select Check Tool – this search tool is designed to help you determine the legitimacy of the not-for-profit in question by providing users with information about the organization’s federal tax status and filings.
- Guidestar – this online resource is great for users who want to find out about the validity of tax-exempt organizations as well as other faith-based nonprofits, community foundations and other groups that are typically not required to register with the IRS.
Do nonprofit organizations ask for personal information?
Don’t make it easy for a fraudster to steal your identity by willingly providing them with your Social Security Number. Legitimate nonprofit organizations will never need your SSN to complete a transaction and they should never need to retain any of your personal information for their records – this includes passwords.
Should my donation be in the form of a check or is it OK to give cash?
Yes! For your own security, and tax purposes, be sure to establish a paper trail. The best way to do this is to avoid making any type of cash donations. Instead, every time you give money to a charity, consider using a check or credit card to establish proof of the transaction. Not only is it important to establish a paper trail as a safety measure, it will help you when to go to claim the contribution on next year’s tax return.
I’m still not sure if it’s a valid nonprofit organization?
If the questions above don’t provide you with the reassurance you need, reach out to a trusted advisor who can help you identify whether a particular charitable organization is reputable or not while giving you pointers to help you protect your hard-earned dollars as well as your identity.
By Maribeth Wright, CPA (Cambridge office)
Check out these articles to learn to learn about other fraud scenarios taxpayers should know about.
Tags: cash donation, Charity, community foundation, faith-based nonprofit, fake nonprofits, Guidestar, identity theft, IRS, nonprofit scams, scams, Social Security Number, tax exempt organization, tax fraud, tax status